April 9 (Bloomberg) -- Tata Steel Ltd., India’s biggest
producer, is considering selling some of its U.K. assets as a
weakening economy erodes demand leaving factories underutilized,
two people with knowledge of the matter said.

Selling the U.K. units, acquired as part of a $12 billion
takeover of Corus Group Plc six years ago, would help Tata cut
debt, the people said, asking not to be identified as the
information is private. It is also considering selling part of
its Australian operations, another person said. The people
didn’t specify which of the assets Tata Steel may sell.

Tata Steel has three major assets in the U.K., with a
capacity of 10.6 million metric tons annually, including a mill
at Port Talbot in West Glamorgan in Wales and a plant at
Scunthorpe in South Humberside, England, according to its latest
annual report.

Steelmakers in Europe, where Tata Steel generates two-thirds of its output, are grappling with excess capacity,
falling prices and rising operating costs. The region has
capacity to make about 210 million tons of steel a year, while
demand in a “normal market” is 150 million to 160 million
tons, according to industry lobby group Eurofer.

“The plan is good but it will be difficult for them to
execute this under the given market conditions,” said Rakesh
Arora, head of research at Macquarie Capital Securities (India)
Pvt. “There are hardly any buyers. It probably won’t help in
improving their debt conditions much.”

Debt Burden

Charudatta Deshpande, a spokesman for Tata Steel, declined
to comment on a potential sale in an e-mailed reply to
questions. Tata Steel fell 0.5 percent to 304.40 rupees at the
close in Mumbai today. The stock has slumped 34 percent in the
past year, compared with a 5.8 percent increase in India’s
benchmark S&P BSE Sensex.

Tata Steel needs to redeem a total of $5.5 billion in bonds
and loans by November 2016, according to data compiled by
Bloomberg. Most of the group’s net debt of $10.5 billion was
taken to fund the Corus acquisition.

The company’s losses widened to 7.63 billion rupees in the
three months ended Dec. 31 from 6.03 billion rupees a year
earlier, it said on Feb. 13.

Cutting Jobs

Tata Steel in November said it plans to restructure its
U.K. business, cutting 900 jobs and closing 12 sites as the
industry battles overcapacity and slumping demand. The cuts will
include the loss of 580 jobs and the closure of its Tafarnaubach
and Cross Keys plants in South Wales. Further jobs will go in
Yorkshire, the West Midlands and Teesside.

Tata Steel in February 2011 sold its Teesside Cast Products
unit in northeast England, part of Corus, to Thailand’s
Sahaviriya Steel Industries Pcl for $469 million. The
acquisition included coke ovens, power generation facilities and
the Redcar Blast Furnace.

In December of that year, the company said it mothballed
the Llanwern hot strip mill in Newport, cutting 115 jobs. The
mill will remain shut until the economy and steel demand justify
a restart, it said then. Last November, it announced measures to
restart the mill.

Tata Steel makes engineering steel in Australia, according
to its website.

The company closed its acquisition of Corus in April 2007,
renaming the company Tata Steel Europe Ltd.